This document summarizes a speech given by Duncan C. Campbell, Director for Policy Planning at the International Labour Organization, on the topic of labor markets in developing countries. The summary discusses several key points made in the speech, including that structural change is not occurring quickly enough in developing countries, resulting in a majority of the global workforce remaining in "vulnerable" employment with little social protection. It also notes that while investment levels are a culprit for the slow structural change, the growing global middle class presents both challenges and opportunities in terms of human rights. Finally, the summary discusses some empirical observations about the relationship between a rising middle class and demands for democratic accountability, paid employment over vulnerable work, and shifts in social values

1. UN World Day of Social Justice 20 February 2013
The Labour markets in developing countries:
what's new, what's old?
By, Duncan C. Campbell, Director for Policy Planning in
Employment International Labour Organization
Multidisciplinary Research Seminar Series, jointly organised by the
Work Futures Research Centre and Sustainability Science at Southampton USRGs

2. first topic:
« developing country? »
« emerging economy? »

3. definitionally…
 using World Bank groupings based on GNI per
capita, i.e. low income, middle-low income, middle-
high income, high income. a labour market
discussion of each is warranted !
 « emerging », as defined by Antoine van Agtmael
(IFC)
 Embarked on economic development and reforms
 Have begun to open their markets and « emerge »
 Fast-growing economies, in relative terms

4. Divergence in trend growth
percentage change
7
6
5
Developing countries
4
3
Hi-income countries
2
1
0
1962 1967 1972 1977 1982 1987 1992 1997 2002 2007
Source: World Bank

5. Latin America
Middle East / Africa
Asia / Oceania 2009
1969
USA
EU 15
0 10 20 30 40
% share of global output by region

6. second topic:
the stylized components of « dualism »

7. a first distinction between « employment-
led » and « growth-led » demand for
labour
much economic activity in developing
countries is the search for demand
creation rather than demand derived
from product markets

8. The “Dual Economy” is divided into a “traditional” and a “modern”
economy
The “traditional” Economy The “Modern” Economy
is relatively more …
informal Formal
Vulnerable in employment status Likely to have a higher share of wage-earners
Rural Urban
Likely to be less productive Likely to more productive
Credit-insufficient Access to credit
Likely to have a low capital-to-labour ratio Likely to have a higher capital-to-labour ratio
Oriented to domestic, even local markets Oriented to domestic and international markets
Sheltered from the impact of macroeconomic Exposed to macroeconomic policies
policies
Deficient in the quality of jobs Deficient in the quantity of jobs
Likely to be less or un-protected Likely to have at least de jure protection
Prone to greater earnings instability Stable and predictable in earnings and income

9. third topic:
demographics in relation to labour surplus
and poverty

11. fourth topic:
informality

12. discussion of informality has its own chapter.
that said ….
 ILO (2002) definition of informality
 an (OECD) « informal is normal » stance
 Africa: 80 % of non-agricultural work is informal –
90 % of all new jobs over the past decade
 in the last decade, the informal share of employment
increased in all of the seven most populous
developing countries

13. fifth topic:
Agriculture

14. beyond the income-related definition, a developing country
is also defined by the significance of agriculture
 it is also where poverty is concentrated.
 the implication is that, to understand labour markets
in developing countries, one needs to understand
agriculturally based labour markets

16. In agriculturally based economies, the
weather and growth are more firmly
bound,
so are commodity prices and
macroeconomic stability

18. sixth topic:
status in employment varies greatly
between developed and developing
countries

19. a typology of status in employment
 paid employment is a developed-country
phenomenon, except at its lowest end (casual wage
labour by the rural landless)
 self-employment, with a significant share being
« survivalist » is a developing-country phenomenon
 various forms of unpaid work, and non-market
work, are developing-country characteristics

22. seventh topic:
the Lewisian view of development and
structural transformation

23. some basic assumptions
 declining share of agriculture in employment and
output. largely true, but hardly linear
 growth of the industrial sector with development.
largely true, but not everywhere, e.g.
deindustrialization in LDCs, the as yet unfulfilled
China export-labour bonus foreseen by the World
Bank
 a large service sector is for the wealthy countries.
true and false.

26. eighth topic:
human capital and development

27. human capital is a subject in its own right in this
volume
 the chapter and the volume note praiseworthy gains
in the breadth and depth of school enrolment
 the chapter notes the disparity between the quantity
and the quality of education
 the chapter argues that economic diversification and
HK go hand-in-hand, and are « dually causal »

28. 50
Agriculture, value added (% of GDP)
y = -8.92ln(x) + 43.876
R² = 0.457
40
30
20
10
0
0 20 40 60 80 100
Share of workers with secondary education or above
(% of total labour force)

29. What’s new?

30. The first is, structural change is not
happening fast enough, and it has stalled
with the Great Recession

31. This means that the share of those in
« vulnerable » employment has not diminished
enough – still a majority of the world’s workforce.
« Vulnerability » captures those least likely to have
social protection
Social protection, since the UN Declaration of the
1940s, is defined as a human right

32. A lot of culprits, but investment shortfall is a
major one
0.6 0.8
Contribution of structural change to growth
Contribution of structural change to growth
0.7
0.5 0.6
(in percentage points)
(in percentage points)
0.5
0.4 0.4
0.3
0.3 0.2
Low Medium High Low Medium High
Average investment (% of GDP), Average investment growth,
1999-2011 1999-2011

33. That is the downside of structural
change on human rights in this
World Day for Social Justice.
There is an upside as well – the
growth of the global middle class

34. Divergence in trend growth
percentage change
7
6
5
Developing countries
4
3
Hi-income countries
2
1
0
1962 1967 1972 1977 1982 1987 1992 1997 2002 2007
Source: World Bank

35. The middle class ($4-$13 ppp) per day is
growing in the developing world
2,700,000
2,400,000 Above middle class
Employment by economic class (thousands)
2,100,000
1,800,000
Middle class
1,500,000 Near poor
1,200,000
Moderately poor
900,000
600,000 Extremely poor
300,000
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

36. What do we know about the middle class and
human rights ?
 The middle class likes to assert rights – think of it as
human rights as conservation of economic gain
 Inequality is an enemy. A quick look at this

37. Inequality will matter, but no time to discuss
today ….

38. Middle class means assertion, ultimately, of rights
and of the right to maintain them: these
concluding points are empirical
 For government accountability, the larger the size of the
middle class, the greater is the demand for democratic
accountability and participation, transparency, and for
curbing corruption.
 For labour markets, depending on its relative rate of
growth, a rising middle class augurs well for a greater share
of paid employment and a decline in the work that ILO
defines as “vulnerable”.
 Finally, for social values, a rising middle class implies a
shift in these toward stability and criteria of fairness

39. many thanks

40. Video Case Studies
1. Trade Unions Help Migrant Workers Realise Labour Rights in
Thailand (ILO)Thailand-
http://www.youtube.com/watch?v=cXTh7Z5NCSc&list=UUrlcu5KChYyH
wXlIeD7oLUg&index=11
2. Increases in child labour over past four years a worrying
trend, ILO
http://www.youtube.com/watch?v=2z5YpSDuVVU&list=UUrlcu5K
ChYyHwXlIeD7oLUg&index=27
3. Youth unemployment in Greece (CD link).